Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Biotech / Medical : Sepracor-Looks very promising -- Ignore unavailable to you. Want to Upgrade?

To: quidditch who wrote (2763)	5/14/1999 6:28:00 PM
From: Andreas Helke	Read Replies (1) \| Respond to of 10280

The forecasted burn rate is about $4/share x 32.7M shares x 2 years. That gives expenses of about $260 M Long-Term Debt/Equity (mrq) 113.26 Total Cash (mrq) $499.6M The difference is $386 M Thanks to its successful bond sale Sepracor should have enough capital available to last until profitability in 2001 or 2002 Andreas

To: quidditch who wrote (2763)	5/17/1999 12:44:00 AM
From: RCMac	Read Replies (2) \| Respond to of 10280

>> My nagging doubt is burn rate. << >>where do we get to before product sales/royalty revenues begin to amortize R&D, product development and G&A?<< SEPR had $462.5M cash at 3/31/99, down from $499.6M at 12/31/98. Here is the 1Q99 press release: biz.yahoo.com From that, one could say that the "burn rate" was $37M for the quarter, annualize that to $148M, and conclude that SEPR has a bit over "three years worth of cash." But that would be too simple, for several reasons, including: (1) Xopenex revenues will start to flow in this quarter, reducing the net burn, (2) other revenues - milestones, upfront payments on new deals, etc. - will also flow in at various times, further reducing it (3) revenues from DCL, "Prozac II", norcisapride, etc. (and probably Norastemizole) will start flowing in 2000 and 2001, and something will come in from Allegra, and, (4) in any event, much of SEPR's spending on R&D is substantially discretionary -- SEPR can choose to develop 2, 3 or 6 of its 20+ drug candidates at any one time, and can choose to do so alone, or can partner with a big pharma in either a royalty or co-promotion deal. When exactly does revenue rise to pay for R&D, etc., and turn into profit? I don't know exactly - most analysts predict 2001, only 2 or 2 ½ years from now, no problem at the current "burn." Accordingly, IMO there is essentially no risk that SEPR will run low on cash. At worst, the ability to adjust spending [ factor (4) above] in light of revenues -- like any other business matching expenditures to resources - assures this. The usual concern in development stage biotech companies about "burn" is not something I can worry about in SEPR's case. The issue is no longer on the table, because SEPR shrewdly raised that extra $300 million in December. In short, as I read SEPR's financial statements and business plan, SEPR has the financial strength to have the flexibility to develop each ICE in what appears the most profitable way, and has the ability to make it through to profitability in 2001 or 2002 without needing to further tap the financial markets. --RCM